THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

LOU DOBBS, CNN ANCHOR: Tonight: another food safety scare for American consumers and another recall of ground beef. American consumers have no idea what's in our hamburgers or even where the meat comes from. We will have that special report and what your government isn't doing about it. Also tonight, charges that New York's governor, Eliot Spitzer, is recklessly breaking our laws by offering driver's licenses to illegal aliens. The county clerk who is leading the battle against the governor's proposal is among our guests.

And rising outrage over foreign companies taking control of our highways, highways built with your taxpayer money, another example of foreign interest buying some of our most important assets as our government completes its giveaway.

I will have a few words of my own here tonight about Senator Barack Obama, CBS' Katie Couric, PBS' Bill Moyers, on what it means to be a patriot in this country and what a lapel flag pin has to do with any of that.

All of that, all the day's news and a lot more straight ahead here tonight.

ANNOUNCER: This is LOU DOBBS TONIGHT: news, debate, and opinion for Monday, October 8.

Live from New York, Lou Dobbs.

DOBBS: Good evening, everybody.

America's closest ally in Iraq, Great Britain, today announced a sharp reduction in the number of its troops in Iraq. Prime Minister Gordon Brown said British troop levels will be cut in half, to just 2,500. The British withdrawal illustrates the growing differences between the United States and Britain on the conduct of this war. The United States has sharply increased the number of our troops in Iraq to more than 160,000.

Jamie McIntyre has the report from the Pentagon -- Jamie.

JAMIE MCINTYRE, CNN SENIOR PENTAGON CORRESPONDENT: Well, Lou, tonight, it's getting a little lonelier for U.S. troops in Iraq, but the White House insists it's just another sign of success.

GORDON BROWN, BRITISH PRIME MINISTER: There will be 2,500 troops subject to military advice in the spring.

MCINTYRE: With the reduction of roughly 5,000 British forces by half, the U.S.-led coalition is shrinking. Britain is America's biggest coalition in partner right after Iraqi forces and private security contractors.

While the State Department lists 27 countries with troops in Iraq, only one has more than 1,000, South Korea with 2,300. The effect on the already overstretched U.S. Army is unclear.

GENERAL GEORGE CASEY, COMMANDER, MULTINATIONAL FORCE IN IRAQ: It's a choice for the British government. And am I worried that the Army, our Army will have to take on more of a load? And I would say I would have to wait to see how General Petraeus evaluates the impact of that decision.

MCINTYRE: The British plan is to drop from 5,500 troops in southern Iraq to 4,500 in December when Iraqi troops take full control of Basra province, then get down to 2,500 troops by next spring, if commanders say it's safe.

The British prime minister credited the Iraqi army's ability to stand up for allowing his troops to stand down. But during a raucous House of Commons session, Brown's political opponents offered a more cynical reason that having trained some 30,000 Iraqi troops, there is just not much more the British forces can achieve militarily.

DAVID CAMERON, U.K. CONSERVATIVE PARTY LEADER: However much the international community does, there is clearly a limit to what outsiders are able to achieve.

(END VIDEOTAPE)

MCINTYRE: The British departure from the largely Shia south will have little immediate effect on U.S. forces operating farther to the north in Baghdad and IN the insurgent strongholds that surround it.

But if violence reignites in the south after the British forces leave, it could underscore one of the U.S. commanders' worst fears, that Iraqi troops are really not up to snuff -- Lou.

DOBBS: Jamie, thank you very much -- Jamie McIntyre from the Pentagon.

The White House reaction, the White House saying the British drawdown is not a surprise, but the British withdrawal from Iraq has accelerated since Prime Minister Gordon Brown replaced Tony Blair. Published reports in London say Britain may withdraw all its troops by next year.

Ed Henry has our report from the White House -- Ed.

ED HENRY, CNN WHITE HOUSE CORRESPONDENT: Lou, this is as sure a sign that in fact it is a new day in Great Britain under Prime Minister Gordon Brown. President Bush cannot rely on Tony Blair any more to back him at all costs.

You will remember that back in July at Camp David, Mr. Brown was careful not to break with Mr. Bush too harshly, declaring that the two nations still have responsibilities to keep in Iraq, but in actions Mr. Brown is, in fact, turning the page from the Blair era. White House officials note that this is not a new announcement to them, that this is consistent with previously announced plans from the British government and Prime Minister Brown also seemed to try to downplay any talk of a split by touting this as a sign of progress.

(BEGIN VIDEO CLIP)

BROWN: Forty-five thousand U.K. troops at the time that Saddam Hussein fell. There will be 2,500 troops subject to military advice in the spring. That is a very substantial reduction in the numbers, but it is only possible because the Iraqis are now able to take responsibility for security themselves.

(END VIDEO CLIP)

HENRY: Now, of course, that begs the question, if the Iraqi forces are stepping up so much, why hasn't there been a larger U.S. drawdown of troops? And, of course, the next thing to pay attention to is what happens in the Australian elections.

John Howard, the prime minister, facing a tough reelection. The opposition leader there, Kevin Rudd, has promised that if he beats John Howard he will remove Australia's remaining 500 combat troops from Iraq. Obviously, the White House will be paying attention to that. It could be a sign of the president having a shrinking number of friends on the world stage, Lou.

DOBBS: Well, to put this in some perspective, if I may, Ed, we should acknowledge it seems to me straightforwardly that the number of foreign troops, that is aside from the United States and Iraq, are so de minimus as to be really a public relations fig leaf on something called a coalition.

There are remarkably few troops involved from outside Iraq, other than the United States.

HENRY: It was originally called a coalition of the willing. Critics of this White House have called it a coalition of the wilting. Obviously, that's because the number of foreign forces has been decreasing as the number of U.S. forces on the ground, obviously, have increased because of the surge. The president has now talked about drawing down small numbers of U.S. troops, but, obviously, sure, U.S. forces are doing the lion's share, almost all of the work at this point when you look at the numbers, Lou.

DOBBS: Ed, thank you very much, Ed Henry from the White House. The insurgents in Iraq have killed four more of our troops, three soldiers and a Marine; 10 of our troops have been killed in Iraq so far this month; 3,818 of our troops have been killed since the beginning of the war, 28,093 of our troops wounded, 12,600 of them seriously.

The United States says Iran is helping insurgents kill our troops but Iranian President Ahmadinejad is ignoring U.S. protests. The Iranian president today also ignored Iranian students in Tehran who accused him of being a dictator. About 100 students protested against the Iranian president as he visited Tehran University. But the Iranian president continued his speech loudly supported by pro- government students.

Turning to politics in this country, liberal and labor groups today launching an aggressive advertising campaign trying to overturn President Bush's veto of a new health insurance bill for children. Democrats want the government to spend another $35 billion on children's health insurance, but President Bush says the legislation is a step towards socialized medicine.

Dana Bash reports from Washington.

(BEGIN VIDEOTAPE)

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT (voice-over): The Democrats' hopes of overriding the president's veto of children's health care could ride on a new million dollar ad campaign.

(BEGIN VIDEO CLIP, AD)

NARRATOR: George Bush just vetoed Abbi and Josh. He vetoed Latoya and Kevin. Bush vetoed health insurance for millions of America's children whose parents work but can't afford coverage.

(END VIDEO CLIP)

BASH: A coalition of labor and advocacy groups is teaming up to sponsor this national commercial and similar ads targeting 20 GOP members of Congress. The goal is to pressure those Republicans to drop their opposition to expanding the children's health program by $35 billion.

(BEGIN VIDEO CLIP, "FOX NEWS SUNDAY")

REP. NANCY PELOSI (D-CA), SPEAKER OF THE HOUSE: We take it one step at a time. And right now, we have the next 10 days to two weeks to try to peel off about 14 votes in the House.

(END VIDEO CLIP)

BASH: But despite the money and manpower Democrats and like- minded groups are pouring into overriding the president's veto, the Democrat in charge of counting the votes tells CNN, he's pessimistic.

REP. JAMES CLYBURN (D), SOUTH CAROLINA: It will be very, very tough for us to get 290 votes. I think that, a lot of people think that 45, 50 may be the high water mark on the Republican side.

BASH: The president and many Republicans say the Democrats' proposal to expand the children's health program unnecessarily broadens government-run health care, but privately, Republicans are concerned that argument is overpowered by Democrats' talk of needy children. The administration is is already looking for compromise.

MICHAEL LEAVITT, SECRETARY OF HEALTH AND HUMAN SERVICES: The veto will be sustained and then we will go on to a real conversation about how we put poor children first, how we then can put insurance within the reach of every American, including every child.

(END VIDEOTAPE)

BASH: Republican officials tell CNN they're poised to counter the Democrats' lobbying push. They're feeding talking points to conservative radio and conservative blogs that the president does actually support funding the children's health program, but thinks it should be limited to America's neediest children -- Lou.

DOBBS: Dana, thank you very much from Washington, Dana Bash from Washington.

Coming up next here, outrage over state and local government efforts to turn over vital U.S. infrastructure assets paid for by taxpayer dollars, of course, to foreign companies.

Lisa Sylvester will have the report -- Lisa.

LISA SYLVESTER, CNN CORRESPONDENT: Lou, state governments have found something new to outsource, the very roads that we all drive on. These public and private partnerships are gaining in popularity, but critics say these deals a dead end for taxpayers -- Lou.

DOBBS: Lisa will have that report coming up here tonight.

Also, a new meat recall. New questions about what our federal government isn't doing to ensure the safety of our food supply.

And another astonishing outburst by President Felipe Calderon of Mexico, a new affront to our sovereignty. Anyone in this White House listening? Anyone in this White House?

And tonight, I will have a few words about patriotism, American flag lapel pins, oh, yes, and Senator Barack Obama, CBS' Katie Couric and PBS' Bill Moyers, maybe a few others as well.

Stay with us. We will be right back.

(COMMERCIAL BREAK)

DOBBS: Our federal government and many state governments have absolutely no apparent respect for the American taxpayers or the citizens that those institutions represent.

A foreign company is about now to acquire toll rights to another major highway in this country.

And as Lisa Sylvester reports, the outsourcing of our roads, highways, our infrastructure, will cost American taxpayers a great deal in the long run.

(BEGIN VIDEOTAPE)

SYLVESTER (voice-over): Private companies are hitting the roads, snatching up highways with long-term leases, the latest venture, the Washington, D.C.-area beltway. An Australia/U.S. consortium would expand the beltway in Virginia. In exchange, it would control this new section of the highway for the next 75 years, pocketing future toll revenue.

Critics say this public-private partnership negotiated by the State Department of Transportation benefits investors, but not taxpayers.

STEWART SCHWARTZ, COALITION FOR SMARTER GROWTH: I think the DOTs are heading too quickly into this for short-term gain, but giving away a lot over the long term, effectively mortgaging our future.

SYLVESTER: The Coalition for Smarter Growth, an environmental group, says turning over highways to a private concern means less oversight over setting of tolls, less flexibility in other transportation projects and less money for future highway improvements.

Virginia is among the states that has either completed or is in the final stages of a private-public partnership. At least five more states are considering similar arrangements. These partnerships have hit roadblocks in three other states, Texas, Pennsylvania and New Jersey. But supporters of these deals say they're necessary because states can't afford to update crumbling infrastructure.

LEONARD GILROY, REASON FOUNDATION: Well, governments can't even balance their budgets, and now we're supposed to believe that they can find the billions and billions of dollars to invest in the roads and bridges we desperately need?

SYLVESTER: Yet, the toll projects are considered to be financial bonanzas. In Indiana, Spanish and Australian investors are expected to break even within the first 20 years, and reap in pure profits for the next 55 years.

Representative Pete DeFazio worries about the precedent that is being set.

REP. PETER DEFAZIO (D), OREGON: Thus far, it's fairly benign, but what happens when China wants to get a choke point to some critical points, let's say, one of our ports or something else and they want to invest? I think it's a very bad precedent.

(END VIDEOTAPE)

SYLVESTER: Representative Pete DeFazio also takes issues because so many of these deals are negotiated in secret with very little input from voters. And he has sent a letter to the governors warning them about some of the pitfalls and is considering introducing federal legislation that would place more conditions on future partnerships -- Lou.

DOBBS: Thanks to Congressman DeFazio and others who are starting to pay attention to this and taking some action.

This is not a question of local taxpayers and a case of state and local government infrastructure being sold off and the federal government not receiving word or being offered a voice in this. They're simply being ignored and their interests have been completely misrepresented altogether. It is an outright ripoff of our infrastructure and assets that are paid for by the American taxpayer. It's shameless.

SYLVESTER: Lou, in so many cases, too, the voters, the taxpayers, they don't find about these deals until after it's signed, sealed and delivered.

DOBBS: Well, we're going to do our very best, thanks to you, Lisa, and our other colleagues to make certain people do find out about it. Thank you very much, Lisa Sylvester from Washington.

Tonight, store clerks around this country are once again taking tons and tons of ground beef off supermarket shelves. This time, Cargill has recalled 840,000 pounds of ground beef patties, concerned that that meat is tainted with potential deadly E. coli bacteria.

Just last month Topps Meat recalled more than 21 million pounds of ground beef after 30 people were sickened in at least eight states.

As Christine Romans now reports, the meat recalls are more worrying because American consumers have no idea what's in our hamburgers and we have no idea where that meat comes from.

(BEGIN VIDEOTAPE)

CHRISTINE ROMANS, CNN CORRESPONDENT (voice-over): The hamburger most Americans eat comes from an unknown number of animals, almost certainly from several countries. And, today, most consumers have no way of knowing where their meat comes from, where it was slaughtered or how long ago. The recent spate of E. coli outbreaks renewing calls for country of origin labeling.

The meat from these cattle will be mixed with meat from all over the world, in fact, just this year alone from 16 different countries.

Bill Bullard represents American cattle producers.

BILL BULLARD, CEO, R-CALF USA: Canada, Mexico, Argentina, Brazil, Croatia, Honduras, these products could well be included in the hamburger you're purchasing today and you would have no idea because there is no label as to where that beef was produced.

ROMANS: Back in 2002, Congress mandated that food bear a made-in label. Again and again under pressure from importers so-called country of origin labeling has been delayed, angering some U.S. ranchers.

TOM BUIS, NATIONAL FARMERS UNION: Any of these importers, they make more money by importing less expensive, lower-quality product and, basically, deceiving consumers into believing it's a U.S. product. So, it's the old adage follow the money.

ROMANS: The biggest beef lobby, the National Cattlemen's Beef Association, represents importers, as well as domestic producers. It is opposed to mandatory country of origin labelling. A spokeswoman says there is no link between where a product is from and food safety -- quote -- "There are multiple safeguards in place to ensure food safety all overseen by the USDA."

But in the recent Topps contamination, it took USDA 18 days from the first positive test for E. coli before the meat was recalled. A USDA official admitting -- quote -- "The agency is not completely satisfied with the time that elapsed."

At Topps, a USDA inspector was present daily -- quote -- "We have determined, in fact, there is room for improvement."

(END VIDEOTAPE)

ROMANS: So far, at least three have been sickened by the E. coli contamination that led to Cargill's recall of 844,000 pounds of ground beef. Cargill would not tell us where that beef was from, how much was imported or from where. But it did say it would report that information to the USDA -- Lou.

DOBBS: That's very nice of Cargill. I really want to commend them.

So, let's give them an opportunity to do something else, not only Cargill, but the USDA, all the federal agencies, the meat packers in this country. Why don't you all tell exactly the American people how much beef you're importing, what percentage of it is going into each beef patty in this country, and why don't we all quit kidding ourselves?

The meatpacking industry in this country is not operating to benefit the American consumer, nor the American worker. Wages in the American beef packing industry have been declining over the last 30 years and safeguards for the American consumer are all but nonexistent.

ROMANS: Welcome back, Lou.

DOBBS: It is good to be back.

Great report. Give them hell, Christine Romans.

That brings us to the subject of our poll tonight. Do you believe there is any legitimacy to a government that does not secure its borders and ports, nor ensure the safety of its imports and its food supply? What is this government doing? Please choose yes or no. We can't give you a hell yes or a hell no. We will do that next time. And we will have the results for you later in this broadcast.

New developments tonight in that deal between 3Com and the Chinese technology firm Huawei. Treasury Secretary Henry Paulson, you remember him, well, it turns out he is going to recuse himself from a government review of that merger because of his previous job at the helm of a little firm called Goldman Sachs, which, by the way, is also advising 3Com in this deal.

3Com provides U.S. government agencies, including the Pentagon, with wireless network security. Defense analysts oppose this deal. They say it poses a significant threat to U.S. national security because of Huawei's ties to the Chinese military.

Perhaps if the secretary of the treasury weren't so intent on recusing himself, he might stand up and act in the national interest, rather than worry about a previous commitment to a Wall Street firm.

Coming up next here, a governor's plan to give legal driver's licenses to illegal aliens. We will have a special report for you on just how many laws the governor, Governor Spitzer of New York, would like to break.

Also, millions of illegal aliens are already here, of course. The president of Mexico say more are on the way, no matter what you think or what this government might even begin to consider. Calderon says the flood of illegal immigrants from his nation is simply irresistible, unstoppable.

Oh, yeah?

And is Senator Hillary Clinton unstoppable? Three of the country's best political analysts join me. We will be talking about the latest polls, the latest nonsense from what looks like a dance of pygmies next on this broadcast.

Golly, it's good to be back.

(COMMERCIAL BREAK)

DOBBS: Mexico's president, Felipe Calderon, is urging Americans to his in his words stop fighting the inevitable. Calderon says the flow of illegal aliens from his nation across our southern border simply can't be stopped.

That's why, President Calderon says, Americans should simply acquiesce, build bridges, as he put it, not fences along our border.

And, as Bill Tucker reports now, that's exactly what the Bush administration is doing, making it easier by the day for illegal aliens to both cross our border and to work here.

(BEGIN VIDEOTAPE)

BILL TUCKER, CNN CORRESPONDENT (voice-over): There is no point in trying to stop illegal immigration, it can't be stopped, says Mexico's president, Felipe Calderon. The president made his comments to ABC News.

(BEGIN VIDEO CLIP, ABC NEWS)

FELIPE CALDERON, MEXICAN PRESIDENT: Capital and labor are like right shoe and left shoe, and one needs the other. I think it's impossible to stop that. It's natural. It's an economic phenomenon.

(END VIDEO CLIP)

TUCKER: Two weeks ago, he made the same comments at a meeting of Mexican and American border governors. Calderon is not talking about the fact that he has a vested interest in illegal immigration continuing. In the first six months of this year alone, Mexicans living legally and illegally in America sent back to Mexico nearly $11.5 billion.

It does appear Calderon shouldn't lose any sleep worrying about the president of the United States doing anything to stem the flow of immigration. The White House has acknowledged that the Departments of Homeland Security, State and Labor are looking to rewrite regulations to revamp agriculture visas, H2-As and H2-Bs, to redefine terms, such as temporary, and expand the types of work those workers are allowed to do.

The change is being considered in response to demand from farmers, who say they're short workers. The administration not sharing any details of the proposals and they don't necessarily need congressional approval. Critics of the administration's immigration policy says this approach is a big mistake.

CAROL SWAIN, VANDERBILT UNIVERSITY: Every time they tinker with immigration, just fiddling around with little bits of it, they make the situation worse. It cannot and should not be done piecemeal.

TUCKER: The program the administration is making changes to are used by less than 2 percent of American farms to bring in foreign workers.

(END VIDEOTAPE)

TUCKER: And some farmers say they don't like to use those programs because they're difficult, bureaucratic and more expensive compared to just hiring illegal aliens, Lou, who are cheaper and they don't have to have the same work rules...

(CROSSTALK)

DOBBS: We certainly wouldn't want anybody to have to follow rules and actually have to go through a government approval process...

TUCKER: Right.

DOBBS: ... actually protect and provide for the workers that they would have... (CROSSTALK)

DOBBS: And, of course, we certainly wouldn't want them to pay, say, double the wages, and raise the price of lettuce, for example, 10 cents for the American consumer.

There are so many lies. And this administration is a bunch of scurrilous cowards. They haven't got the guts or the intelligence or the capacity to do this right. And that is recognize what the American people want done here, which is to secure those borders.

And, if we need more, more workers in this country from abroad, then let's demonstrate it economically and explain why the major industries where illegal aliens are working -- that is, construction, hospitality, leisure, and, of course, construction principally -- are going down, rather than wages rising.

This is disgusting. This administration should be held accountable. And these idiots, like Senator Dick Durbin and these people trying to push through this push-up, this escalation in visas, I mean, these people need to get real, because they are really offending the American people. They are offending our traditions and our laws. It's disgusting.

Bill Tucker, thank you very much. I appreciate it.

Senate Majority Leader -- speaking of disgusting, Senate Majority Leader Harry Reid, he's still all excited about that amnesty agenda for illegal aliens. This so-called senator is promising to bring the DREAM Act to a vote before November 16.

Now, the DREAM Act, of course, would give U.S. citizenship to tens of thousands of illegal alien students in this country. Senator Dick Durbin tried and failed to attach that bill to the defense authorization act. That did pass the Senate last week. Now these geniuses get to take another run at it.

These people don't even know what they're doing. They don't care what they're doing to the American people or this country or our system of law.

Let's take a look now at some of your thoughts -- and, as I cool down over this issue.

Mary in New York said: "Welcome back. We sure did miss you. You must be wondering where to start, as the continued war on the middle class rages on. We, the people, need a voice of reason and, most of all, sanity coming from you, Lou."

Well, thank you. It is great to be back. I want to say thank you to all of you who sent your best wishes for a speedy recovery from that little stay with my tonsillectomy. And that -- as unaccustomed as I am to not being able to speak for a while, we thank you very much. And I appreciate it from the bottom of my heart.

Joan in Ohio saying: "We've been going through withdrawal from not viewing you in the evening. Glad to have you back on our side."

It's good to be back.

And Mark in Missouri: "Welcome back, Lou. Now that you're all rested up, give them some more hell."

I guarantee it.

We'll have more of your e-mail later here in this broadcast.

And coming up next on this broadcast, presidential candidate Senator Hillary Clinton says she has a new plan for the middle class.

We'll be talking with three of the country's best political analysts.

A New York State county clerk standing up to Governor Eliot Spitzer, vowing to never grant drivers' licenses to illegal aliens. Yes, that's what the former attorney general, this -- this governor of New York -- wants to do. He doesn't care much about law either, apparently.

God and politics -- Democratic presidential candidate Barack Obama explains why Republicans have no lock on faith and values and how God infuses every part of his political program.

And Senator Barack Obama is no longer wearing a flag pin on his lapel. I have a few thoughts about that, about CBS' Katie Couric and PBS' Bill Moyers. Good people all, but, boy, do they spew nonsense.

I'll have a few thoughts here later on the broadcast.

Stay with us.

We're coming right back.

(COMMERCIAL BREAK)

DOBBS: Tonight, New York's governor, Eliot Spitzer, still vowing to grant driver's license to illegal aliens in his state. Governor Spitzer facing rising public and political outrage over the issue.

And as Kitty Pilgrim now reports, his decision to hand drivers' licenses to illegal aliens breaks a number of state and federal laws.

(BEGIN VIDEO TAPE)

KITTY PILGRIM, CNN CORRESPONDENT (voice-over): Opponents say New York Governor Eliot Spitzer is in direct violation of Section 1324 of The Immigration and Nationality Act because he is making it easy for illegal aliens to stay in the United States. The law calls for criminal penalties for "any person who encourages or induces an alien to come to, enter or reside in the United States; knowing or in reckless disregard of the fact that such coming to entry or residence is or will be in violation of the law."

GOV. ELIOT SPITZER (D), NEW YORK: We are talking about being practical and moral about those who are already here. We have to deal with the reality that up to one million undocumented immigrants live in New York.

PILGRIM: Contrary to the law, he advocates aiding them.

SPITZER: We can't ignore the reality that when hundreds of thousands of people don't have a drivers' license they suffer and we, as a society, suffer.

PILGRIM: But New York State Law 502, Section 1, of New York's Vehicle and Traffic Law require a Social Security number for a New York license, as does The Real I.D. Act of 2005, passed by Congress and signed into law by the president.

Spitzer's relaxed requirements for drivers' licenses roll back rules imposed by his predecessor as governor, George Pataki. Under Pataki, the Social Security numbers of all applicants were checked to make sure they were valid. Illegal aliens using fake Social Security numbers were blocked from getting licenses.

JIM STAUDENRAUSE, COALITION FOR SECURE DRIVER'S LICENSES: Mohamed Atta was unable to get a New York driver's license. We know that the terrorists went to the other states of Virginia, New Jersey and Florida.

PILGRIM: Opponents of Spitzer's executive order say opening up drivers' licenses to all illegal aliens hands potential terrorists the documents they need to board a plane.

(END VIDEO TAPE)

PILGRIM: Some New York assemblymen are threatening to ask Congress to withhold federal money for infrastructure and transportation if Governor Spitzer doesn't reconsider his policy -- Lou.

DOBBS: Yes. It's hard to imagine what this governor is thinking and how he can even possibly rationalize this in any kind of conscience, talking about being practical and moral to simply provide those licenses.

Where is the practicality?

Where is the morality and his obligation to fulfill his responsibilities to citizens of the State of New York and, certainly, to uphold the law?

It is -- again, this governor, in his early going, is demonstrating such absurdity and a disappointing capacity that it is -- it's breathtaking.

PILGRIM: This done by executive order. That's...

DOBBS: Yes.

PILGRIM: ...one of the big sticking point for many people.

DOBBS: Yes.

These, you know, this is a governor who requires training wheels. And that may be the kindest thing I could say about his position.

Thank you very much.

Kitty Pilgrim.

County clerks all around the State of New York are opposing Governor Spitzer's plan to grant licenses to illegal aliens.

Rensselaer County Clerk Frank Merola has publicly challenged Governor Spitzer, saying he will never violate federal law by issuing these licenses to illegals.

Frank Merola joins me now.

It's good to have you with us.

FRANK MEROLA, RENSSELAER COUNTY CLERK: Thank you.

DOBBS: Now, the laws that the governor is breaking here, your best assessment of what they are?

FRANK MEROLA, RENSSELAER COUNTY CLERK: As far as the law goes, I'm not positive on exactly what it is. But I can tell you one thing, Lou, as far as in our county, we are not going to give a license to someone who is here illegally. You'll see all the time, it never mentions the word illegal.

DOBBS: Right.

And why is that?

MEROLA: Well, I think it's an easy way out. He wants to talk -- call them undocumented.

DOBBS: Right.

MEROLA: He'll call them anything, but he'll never call them illegal, and that's the point.

DOBBS: Well, he says that his policy will decrease document fraud and make New York State's roads safer, in point of fact. You've been working in the DMV more than 20 years. New York's process for licenses has always been considered one of the most secure and one of the most of the intelligent approaches.

What's your reaction?

MEROLA: The past administration has always had the security of the document first in mind. This governor is going totally the opposite.

DOBBS: There -- well, there's, you know, obviously, a lot of concern here.

But other county clerks are siding with you on this issue, are they not?

MEROLA: They are. We have now 13 that signed on. They will not issue a driver's license to anyone that cannot prove they are here legally right now.

DOBBS: And the governor's ability to override your judgment?

MEROLA: Override or not, it's our office. All the employees are Rensselaer County employees, just as they are other county employees. They don't work for the state. There's not a state employee in my office. So no one will process them.

DOBBS: A recent Zogby poll shows most New Yorkers -- despite this sort of elitist, nonsensical, you know, disrespectful position taken by this governor to existing law -- most New Yorkers oppose his policy. The poll showing 58 percent, in fact, disagree with giving illegal aliens drivers' licenses.

Do you have any sense why this governor would decide to hell with the law and to hell with the will of the residents of New York State?

MEROLA: Well, like I said, Lou, I think it goes down to the voting part. I think once they've got that drivers' license, they can allow them to vote. And I think that's the underlying aspect of it.

But as far as in Rensselaer County, I represent 154,000 people. You couldn't get two people in this office that could tell you that I'm not doing the right thing.

DOBBS: And, indeed, doing the right thing and then joined, you said, by 13.

Do you expect other county clerks to come on board with you?

MEROLA: I do. I do. As a matter of fact, they're going back. They're going to talk to their county attorneys and talk to their town boards and they'll try and make a decision from there. We have a lot of new county clerks and it's a tough issue to handle, but...

DOBBS: And people are only awakening now to what is happening in terms of voter registration around the country, because that is, in your judgment, part of the motivation here for the governor.

MEROLA: I think that's the underline of the whole thing. But I'm always talking about the drivers' license part.

DOBBS: Frank Merola, county clerk, we thank you very much for being here.

MEROLA: Appreciate it, Lou. DOBBS: Thank you.

Coming up next, Senator Hillary Clinton -- she says our trade agreements should be judged by whether or not they help our middle class. By golly, I'm with you, Senator.

Also, Senator Barack Obama has an opinion about faith and values in American politics. We'll be talking about that and a great deal more with our panel of top political analysts.

And I have a few opinions about this Senator Barack Obama's decision not to wear an American flag lapel pin and his construction of what constitutes patriotism.

Oh, yes, and let's talk about CBS' Katie Couric and PBS' Bill Moyers.

Boy, oh, boy.

Stay with us.

We'll be right back.

(COMMERCIAL BREAK)

Lunacy among our public figures in this country certainly didn't subside over the weeks that I've been away from this broadcast. I've been no less than astounded, in fact, by the incongruity, the contradiction, the specious and silly public statements by some of our public and political figures over something like a flag pin worn on one's lapel -- like this one that I wear on my lapel.

I started wearing this lapel pin, by the way, after September 11th. I did so out of respect for those killed in the terrorist attacks and in recognition of this country's war on radical Islamist terror.

It turns out that some journalists and some presidential candidates are actually upset about flags on lapels. And over the past few weeks, they have actually adopted some rather superior and supercilious views on the subject.

For example, CBS' Katie Couric, of all people, taking exception to an American journalist saying we -- when referring to the United States -- or as I say each night on this broadcast, our troops in Iraq and Afghanistan.

I'm sorry, Katie Couric, but who could possibly be offended by acknowledging those troops who have sacrificed so much for us and ours?

Senator Barack Obama has decided not to wear a flag pin on his lapel. Senator Obama says his words will be a testament to his patriotism. That's fine.

PBS' Bill Moyers says the flag's been hijacked and turned into a logo, the trademark of a monopoly on patriotism. Oh, please, Bill Moyers, you're too smart for this kind of babble.

All of you, please stop the nonsense -- liberal or conservative, Republican or Democrat. Wear our flag proudly on your lapel or not. But for crying out loud, what is there in each of you that cannot support others wearing it proudly out of respect for the values this flag stands for and America's national values -- freedom of choice among those values.

I choose to wear this pin on my lapel. But if others -- and journalists, certainly, by some tortured reasoning -- believe the absence of the pin suggests neutrality and that gives them the pretense of objectivity, let me assure you, you couldn't be more wrong. And politicians of any political party on any part of the political and ideological spectrum who believe their words could ever rise to the level of the national values this flag represents are sadly ignorant and horribly mistaken.

And no one who does wear this flag, for whatever reason, should ever confuse support for this flag as an adequate expression of patriotism for this nation. True patriotism requires far more.

A reminder now to vote in our poll. Our question tonight -- do you believe there is any legitimacy to a government that doesn't secure its borders and ports or ensure the safety of its imports and food supply, yes or no?

Please cast your vote at loudobbs.com.

We'll have those results coming up here shortly.

The Washington State Supreme Court made it official -- politicians have the right to lie. The court ruling in a 5-4 decision that a Washington State law making it illegal for politicians to lie about their opponents is unconstitutional. The court called the 1999 law a violation of the first amendment right to free speech. The majority opinion saying people have to decide for themselves whether a politician is lying. A dissenting judge called the decision "an invitation to lie."

Well, if I may say, I don't think most politicians need an invitation.

Coming up next here, has Rudy Giuliani found religion?

We'll be talking about that and more with three of the country's best political analysts.

Stay with us.

We're coming right back.

(COMMERCIAL BREAK)

DOBBS: Coming up at the top of the hour, "THE SITUATION ROOM WITH WOLF BLITZER" -- Wolf.

WOLF BLITZER, HOST, "THE SITUATION ROOM": Thanks very much, Lou.

Growing signs of discontent inside Iran. We're going to show you some rare public protests against the president, Mahmoud Ahmadinejad, on his home turf. You'll find out why these demonstrators are willing it risk arrest, even jail.

Also, Hillary Clinton seen by some as simply unstoppable when it comes to locking up her party's presidential nomination.

Can her Democratic rivals do anything to catch up?

Plus, find out why child actors in the new movie "The Kite Runner" are being whisked out of Afghanistan for their own safety. We have exclusive interviews with the book's author and the film's director.

Why don't you just -- why don't you tell those other people to go home, forget it, it's done?

ROBERT ZIMMERMAN, DEMOCRATIC STRATEGIST: Because all of them, including my candidate, know very well that in Iowa the votes aren't over until that caucus concludes. And remember, in Iowa, the caucus is done in a public forum, where people gather in public meeting rooms. And, so, it's a very -- it's a process that's very hard to poll.

The good news for Hillary Clinton is that among traditional voters she's doing well. But for the rest of them, 53 percent are still undecided in Iowa. So it's wide open.

DOBBS: The Washington State Supreme Court, Michael, my gosh, they've decided that it's OK for politicians to lie about one another in their advertising.

Is this a victory for freedom of speech or is it just really endorsing what has been a historic fact -- an historical fact in this country?

MICHAEL GOODWIN, "NEW YORK DAILY NEWS": Yes.

I read part of the decision, Lou. And I tend to agree with the court on this one. I think that it would be an awkward thing to have the government deciding, you know, which politician is lying about an ad. I mean I just think -- I think that's what the marketplace is for. The marketplace in this place is the voters, and the media, to hold them accountable.

DOBBS: Do you agree, Diana?

DIANA WEST, "WASHINGTON TIMES": I do agree, because we don't want the government deciding what constitutes a lie, because so often it can shade between fact and opinion.

DOBBS: Well, I notice that none of the three of you is wearing a lapel pin, so this makes this an easy question for you.

(LAUGHTER)

DOBBS: I just mentioned something about Senator Barack Obama and his wonderful decision to show his patriotism through his words, as if one can through words, do that. I'm not sure it's entirely possible.

Katie Couric saying it, you know, it's very -- it's just not done, you know?

And Bill Moyers saying it's, you know, some sort of right-wing hegemony over lapel pins, which, you know, must come as a great shock to liberals like Chuck Schumer, who wears one, as well.

What do you make of all of that?

ZIMMERMAN: Well, you know, I certainly believe that one can show and one has to show their patriotism by their actions, by their deeds, by their words. But the idea that wearing a flag pin is in any way an insincere gesture or just a political gesture, I think, is absolutely wrong.

DOBBS: Yes.

ZIMMERMAN: And I think it's very wrong for Democrats in particular to take that approach. That flag belongs to everyone and we have to make sure it does.

DOBBS: Absolutely. And the idea -- and Bill Moyers -- whom I respect greatly -- to suggest that there's some sort of monopoly on the part of -- but the one thing that tells you something about where we are right now, I think, as a nation is, first of all, a journalist like Katie Couric suggesting somehow that it's wrong, as well, she said, to refer to our troops in Iraq.

Who the hell does she think she is?

Is she, you know, from Zimbabwe?

Does she think CBS is some sort of Icelandic multi-national broadcasting entity?

I mean it's ridiculous.

I'm very proud of those troops and I'm very proud to be an American.

I'm very proud of their sacrifice. And I think it would just be, you know, irrespective of your politics, whether you're for the war or against the war...

UNIDENTIFIED MALE: Right.

DOBBS: What is going on?

It's...

WEST: Well, I think it shows the distance that the media believes makes them objective, whereas when they refuse to say "we," they are actually showing a sort of an antiseptic attitude toward our troops and their sacrifice.

DOBBS: They're being asinine, in my opinion.

WEST: Yes.

GOODWIN: I mean -- and I agree. I mean I think that -- I'm quite comfortable saying we and our troops. I know a lot of journalists...

DOBBS: Why not -- who would...

(CROSSTALK)

DOBBS: How can you possibly rationalize (INAUDIBLE)...

GOODWIN: Well, because a lot of journalists, Lou, are not. And it really is (INAUDIBLE)...

DOBBS: Oh, I know that, including on this network, by the way.

GOODWIN: Well, and a lot of them -- and a lot of them -- a lot of Americans, I think, right now look upon supporting the troops as somehow supporting the war.

DOBBS: Right. I thought we had gone beyond that.

GOODWIN: And so it's just like with the flag. We haven't. No, we haven't gone beyond that.

ZIMMERMAN: You're dealing with a climate right now where political correctness can paralyze -- paralyze free speech.

DOBBS: Yes.

ZIMMERMAN: And I think that's what this about. We see...

DOBBS: Well, take your political correctness and shove it, I think is the way the...

(LAUGHTER)

DOBBS: And that's our...

UNIDENTIFIED MALE: Well, you know...

DOBBS: That is a policy on this broadcast, by the way.

(LAUGHTER)

GOODWIN: Boy, that chicken soup really works. Welcome to that!

DOBBS: By the way, that chicken soup -- I cannot tell you how many varieties of chicken soup I have been so graciously gifted over the course of the past few weeks. And I do thank everyone.

Let's turn to the fact that the Bush administration, this president and this Congress, Democratically led and Republican -- what would we say -- entrenched, after two terms. The American people have no regard -- they are puking on both these -- these parties and these institutions, the White House and the Congress. The approval rating has never been lower.

What does this say -- and is anybody paying attention to what the American people are telling these so-called leaders?

WEST: No, I don't think they are. I think that there is utter paralysis in Washington. I think a lot of it boils down to the war, Iraq. It boils down to inability to come to grips with Islamic jihad everywhere. And nobody is making any sort of facts about anything.

DOBBS: Well, that's fine. It comes down to this -- the American people think they are a complete bunch of jackasses.

WEST: Yes.

DOBBS: And why doesn't that get through and have some influence on them, Michael?

GOODWIN: I -- well, I think that they're basically insulated from the American people in a lot of ways. The special interest groups, I think fund the campaigns. The special interest groups line up all kind of goodies and perks for the candidates. And in a way...

ZIMMERMAN: I agree with it all. I couldn't disagree more with all of you.

(CROSSTALK)

ZIMMERMAN: I mean, first things first. When I talk about the Bush administration, I do not use the word we, let me be very clear about that. But this administration has grown not just isolated, it has grown -- it is truly a...

(CROSSTALK)

DOBBS: All right, well, what about your candidate?

(CROSSTALK)

DOBBS: What about the Democratic leadership in the Congress?

ZIMMERMAN: Let me talk about them.

DOBBS: What a bunch of idiots.

ZIMMERMAN: That Democratic leadership...

DOBBS: No. Senator Harry Reid is a complete buffoon.

(LAUGHTER)

ZIMMERMAN: Senator Harry Reid and Speaker Pelosi have brought some of the dramatic reforms this country has seen...

DOBBS: Oh, like name one.

ZIMMERMAN: Name...

DOBBS: Name one.

ZIMMERMAN: Name one.

DOBBS: Name one.

GOODWIN: Name one.

ZIMMERMAN: Bringing in the greatest educational benefits since the G.I. Bill of Rights...

GOODWIN: I mean, I think, Lou, you raised an interesting point about that it is nondenominational. The attack on government from the public is nondenominational.

ZIMMERMAN: But that's the point.

DOBBS: Right.

GOODWIN: It is not a...

(CROSSTALK)

DOBBS: It is not about liberal or conservative, Republican or Democrats or...

ZIMMERMAN: Every survey shows the Democrats picking up seats in the Senate and the House.

DOBBS: Oh, you go ahead with your partisan task (INAUDIBLE)...

ZIMMERMAN: Well, because somebody has to...

(CROSSTALK)

DOBBS: ...because I think you've got a very sad ending waiting for you.

ZIMMERMAN: ...some partisanship. I think there's a message coming out of the Democratic Congress. George Bush and the Republican members are not on board and that's their -- they're going to suffer at the polls.

DOBBS: I think that's a partisan response.

You want to leave it there or do you want to...

(LAUGHTER)

WEST: Well, I think it's a partisan response...

ZIMMERMAN: It's how I believe.

WEST: ...but I think there's paralysis at all levels here. And it's really bad for all of us.

DOBBS: Yes. Well, right now I'll take paralysis over partisan advantage.

ZIMMERMAN: Well, I mean, just take the immigration bill. It was a good thing that nothing happened...

DOBBS: Yes, well...

ZIMMERMAN: ...because it was a bad bill.

DOBBS: One thing that we do have are leaders who are capable of nothing.

ZIMMERMAN: Well, that's -- sometimes nothing...

WEST: Nothing can be good.

(CROSSTALK)

ZIMMERMAN: ...better than something.

(CROSSTALK)

ZIMMERMAN: ...nothing is better than something.

DOBBS: We have to break.

We're going to -- we'll resume Friday.

We thank you for being here.

Good to have you.

Robert Zimmerman, Michael Goodwin, Diana West, thank you very much.

How is the book doing?

WEST: Very nicely, thank you.

DOBBS: Good.

Still ahead, the results of our poll.

We'll be right back.

(COMMERCIAL BREAK.

DOBBS: The results of our poll -- 99 percent of you say there is no legitimacy to a government that doesn't secure its borders and ports or ensure the safety of its imports and food supply.

We thank you for being with us tonight.

Join us here tomorrow.

For all of us, we thank you for watching.

Good night from New York.

It is great to be back.

"THE SITUATION ROOM" begins now with Wolf Blitzer -- Wolf.

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